Economic Intervention: Data Gathering And Operationalisation -By Sheriffdeen Tella

For once in decades, the organised labour unions proved it could still bark and bite. It was a one-day action but better than no day. After President Bola Tinubu’s public address, which was unusual under the All Progressives Congress government, some thought there was no need for the unions to go on protest. After all, the government had made public, through the President’s broadcast, its economic plans. The unions thought otherwise because in their analytic minds, some clarifications were necessary and some government’s positions could require alternative solutions. The unions have my support. The President also did well by inviting the leadership for discussion immediately, as the outcome saved the loss of man-hour for another day. The exchange of ideas must have cleared grey areas on both sides. That is the beauty of dialogue and democracy which we missed under the former President Muhammadu Buhari government.

Listening to the President’s speech, particularly on the economic plans, I was impressed that there is more emphasis on the economics of production and by extension, job creation, than doling out money to meet short-term spending. That the government is thinking more of getting Nigerians to work and earn income rather than awaiting handouts every month is the way to go. It is common knowledge that we cannot talk about inclusive economic growth without empowering the population to create wealth. Economic intervention, which is the focus of the President’s speech, seemed to cover the production of goods, provision of services, infrastructure maintenance and policy implementation.

Hopefully, the implementation of the intervention policies will not result in the disastrous outcomes of the past due to lack of commitment and weave of corruption within the rank and file of the institutions set up to implement government policies. Part of the implementation success story of policies is the issue of transparency and accountability in execution. That is why it is important that the government agencies that will be involved in the execution of the intervention must use the opportunity to gather verifiable data on the recipients of the funds. The biodata of all types of industries – micro, small, medium and large enterprises- should be available on a national website; data on ownership, age and size of business, location, employment level before and after intervention, et cetera. In fact, this should be an opportunity for data gathering for future reference in monitoring and assistance.

In an earlier article last month, I submitted that the government should assist local enterprises to produce what we need rather than engaging in the importation of what can be obtained here, as a way of creating jobs and saving the country’s foreign reserves. In that connection, the government has declared its interest in looking inward first before looking for supplies from outside. It has promised to empower even big businesses with funds. But every intervention requires conditions. The government must make some demands.

A meeting with representatives of the organised sector for the government to place its demands is imperative. A signed agreement or memorandum of understanding from the beneficiaries needs to be available. The micro and small businesses may not be able to produce proposals on what they intend to do because of lack of corporate education but the medium and large-scale industries should have proposals stating where they are, where they wish to move to in terms of growth in production, how much employment they will generate yearly if a particular amount is made available, and so on.

The fund should not be seen as part of the national cake for sharing but for production and employment generation. For those big companies, a large part of the fund could be given as loans to be paid back on agreed terms while part, if at all, remains as grants. The fact that the government has indicated payment of interest on the fund is indicative of the fact that it is a loan, not a grant. Whatever amount is requested, the disbursement could follow the World Bank model whereby the fund is released in tranches following the successful usage of the initial or last tranche. For instance, if a business proposal states an output and employment level after a particular disbursement and is able to achieve the level, the next disbursement is effected, otherwise, no disbursement of the next tranche.

Whether small, medium or large enterprises, the government must demand something in return mainly in production, employment generation and sustainability. In this context, funds must be disbursed through appropriate agencies like the Bank of Industry, Bank of Agriculture, Federal Mortgage Bank and other such specialised agencies with the manpower to assist in the implementation and modus operandi of the processes.

The government cannot afford to just throw money at projects without checking their outcomes. Going through due processes can be cumbersome but the chain of bureaucracy can be reduced to get quick results. That is why the involvement of institutions with expertise to carry out the jobs rather than through ministries and their agencies becomes very important. The MDAs are naturally groomed in bureaucracies and attendant delays in taking action. There is always some time lag between identifying problems and conceiving plans to solve the problems. Just as another time lag between policy implementation and effects. The institutions involved in the implementation would need to be briefed on the punishment for delaying actions in this matter requiring some high level of urgency. Information is key. All potential beneficiaries of the government interventions should, by now, know the time and requirements for benefiting from the particular intervention.

Information to the public is also crucial. The public needs to be informed as the implementation of the intervention programmes commences and is being carried on. The information will be a full disclosure of activities. This will help the government to get the support of the public, particularly labour unions, in monitoring, implementation and offering suggestions. Providing information on different activities of government is part of the transparency and accountability required in good governance. It helps the government to resolve issues of misconception, misdirection and put paid to rumours and fake news from social media. So, what is the current level of implementation of intervention policies for the different sectors of the economy?

While planning this write-up, I found that the price of fuel has gone up twice. There is an insinuation that the price hike will not stop until it gets to N1,000 per litre! Of course, the President is aware that with concomitant inflation from the rising price of petroleum, the N500,000 or N1m for small businesses will be meaningless. A large proportion of the intervention fund will be committed to providing power facilities. With the power sector continuing its underperformance, many of the businesses will spend the initial fund buying generators, fueling the generators, and on maintenance of the generators among other production facilities. What we are trying to say here is that the government cannot leave all prices in the hands of market forces.

It was stated in the article referred to above that there is nowhere in the world the market is allowed to have a free ride in price determination. In the foreign exchange market where the market is allowed to determine the exchange rate, we have clean and dirty floating. Clean floating is when the exchange rate is determined fully by the market forces, that is, no government intervention. Dirty floating, as you can guess, is when the market is misbehaving and the Central Bank intervenes to keep the value of the domestic currency in check. All countries in the world intervene at one point or the other. If it does not happen, it would not be in the dictionary or economic literature.

The government cannot be a servant to the market and when the government finds the market failing, it intervenes to correct it. We have been informed that the price of fuel is moving in tandem with the exchange rate. While the government is working towards improving the exchange rate, it is imperative that it intervenes regularly in the price of fuel, exchange rate, interest rate, and wage rate. Between floating and fixed exchange rate regimes is what we refer to as a crawling peg exchange rate regime. In this case, the Central Bank set upper and lower bands for the movement of the currency. Such a regime is used temporarily while sorting out structural rigidities affecting economic production, output and other economic misalignments. The Central Bank of Nigeria can explore this in this interim period. The presidency must be interested directly in the movement of petroleum prices and the exchange rate with a view to moderating them to avoid the breakdown of law and order in the country.